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Does the FCRA require proof of emotional distress at summary judgment? Third Circuit Summary.

April 5, 2013 Leave a comment

This week contains yet another installment in a series on what sort of evidence federal courts require, when they are asked to award damages to plaintiffs who claim to have suffered emotional distress due a defendant’s violation of the FCRA.  Our focus this week is on the courts in the Third Circuit Court of Appeals.

This week’s post will be short, because the Third Circuit itself addressed this issue directly, in Cortez v. Trans Union, LLC, 617 F.3d 688 (3d Cir. 2010).  The case involved a Trans Union product that informed creditors if someone who was trying to borrow money appeared to be on the federal government’s terrorism watch list.  When Ms. Cortez attempted to buy a car on credit, Trans Union told the dealership that her name appeared on that watch list, so the dealership wouldn’t lend her the car.  Trans Union didn’t clarify that there may have been two Ms. Cortezes with the same name (one being our plaintiff, and the other being a different woman who’d done something naughty), and it didn’t provide Ms. Cortez with any way to get its reports to stop telling creditors that her name was on the watch list.  A jury found an FCRA violation:  it awarded her $50,000 in actual damages and $700,000 in punitive damages (which were later reduced to $100,000).

Ms. Cortez sought actual damages for the severe emotional distress that Trans Union allegedly caused her to suffer.  She offered personal testimony and testimony from her daughter,  but she didn’t offer any medical evidence or indicate any loss of credit.  The trial court felt that the jury’s decision to award her $50,000 for her emotional distress was an “exceedingly generous” award but allowed it to stand, and so did the Third Circuit.  When Trans Union challenged that award on appeal, the Third Circuit held that:

1) “damages for violations of the FCRA allow recovery for humiliation and embarrassment or mental distress even if the plaintiff has suffered no out-of-pocket losses”;

2) “a consumer may be awarded actual damages even if she is able to obtain credit after explanation of the inaccuracy”; and

3) “we have not adopted, and now refuse to adopt, the Fifth Circuit’s standard requiring “a degree of specificity which may include corroborating testimony or medical or psychological evidence in support of the damage award …. Such corroboration goes only to the weight of evidence of injury, not the existence of it.”

In short, this week’s summary was easy:  courts in the Third Circuit are required, under the Cortez decision, to allow plaintiffs to submit whatever evidence they like in support of emotional distress damages, even unsubstantiated testimony, whether or not the plaintiff alleges any other kind of harm.  It is for the jury to decide whether to believe that testimony and that evidence and what award to grant because of it.

This is obviously a different standard from the one that we saw in the First and Second Circuits, and it is not favorable to defendants.


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